Online Notariat team
1 November 2026
Reviewed by our notary in St. Gallen
Key takeaways
The sole proprietorship is the simple, low-cost start – no capital, simple bookkeeping. In return you are liable with all your private assets. The GmbH separates business and private, but involves more administration.
- GmbH: liability limited to the company's assets, CHF 20,000 share capital (stays in the company), double-entry bookkeeping
- For tax purposes a GmbH often pays off only from around CHF 80,000–150,000 profit, depending on canton and salary/dividend split
- Sole proprietorship with us from CHF 99, GmbH CHF 390; switching later is possible at any time, usually tax-neutral
"Sole proprietorship or GmbH?" is the question almost every self-employed person in Switzerland asks sooner or later. There is no one-size-fits-all answer – but there are clear criteria. This guide compares the two from a notary's perspective.
The comparison at a glance
| Sole proprietorship | GmbH | |
|---|---|---|
| Liability | Personal and unlimited, with private assets | As a rule only the company's assets |
| Capital | None required | At least CHF 20,000, fully paid in |
| Formation | Register application with certified signature, no notarial deed | Public deed by a notary |
| Commercial register | Mandatory from CHF 100,000 turnover, voluntary below | The company only exists once registered |
| Business name | Must contain your surname | Freely chosen, with the suffix "GmbH" |
| Bookkeeping | Below CHF 500,000 turnover, simple records suffice | Always double-entry bookkeeping and annual accounts |
| Taxes | Profit taxed as the owner's income | Profit tax at company level; salary and dividends taxed for the owner |
| Social security (AHV) | As self-employed, on the entire profit | On the salary – you are employed by the GmbH |
| Formation with us | CHF 99 + certification + register fee CHF 80 | CHF 390 + register fees CHF 450–600 |
Liability: the key difference
In a sole proprietorship, the business and the owner are legally one. You are personally and fully liable for all business debts – with your savings, your home or your car.
A GmbH is a separate legal entity. As a rule, only the company's assets are liable for its debts. You are personally liable only in exceptional cases – for example for a personal guarantee requested by a bank, or if you breach your duties as managing director, such as not paying social security contributions. If your work carries liability risks, or you employ staff or sign larger contracts, a GmbH often protects you early on.
Taxes and social security: when does a GmbH pay off?
In a sole proprietorship, the entire profit is taxed as your income – progressively, together with all other income – and social security contributions as a self-employed person are due on the entire profit.
In a GmbH, the company pays profit tax, effectively around 12% to 21% depending on the canton. You draw a salary, on which social security contributions are due, and possibly a dividend. Dividends from holdings of at least 10% are taxed at only 70% at federal level and only partially in the cantons. Profits that remain in the GmbH bear only profit tax.
Against this stand the extra costs of a GmbH: double-entry bookkeeping, annual accounts, often a fiduciary. As a rule of thumb, a threshold of around CHF 80,000 to 150,000 net profit is often quoted. What really counts are your canton of residence and seat, the split between salary and dividend, and your personal plans – ask your tax adviser for the exact calculation.
Other criteria besides taxes
- Partners: founding with others? A GmbH creates clear rules on shares, profit distribution and exit.
- Employees: responsibility and liability risks grow with staff.
- Credibility: business clients, banks and landlords often see a GmbH as more substantial.
- Sale and succession: GmbH shares can be transferred – a sole proprietorship is tied to its owner.
- Capital: a GmbH needs CHF 20,000. This is not a cost; it remains the company's money.
Switching later: from sole proprietorship to GmbH
The decision is not forever. Many start as a sole proprietorship and switch once turnover, risk or partners call for it. The business is transferred to a new GmbH or AG:
- Asset transfer under the Mergers Act – requires the sole proprietorship to be registered in the commercial register.
- Formation by contribution in kind – the business assets are contributed to the new company; possible without registration.
The conversion is usually tax-neutral if the business continues and the new shares are not sold for five years. With us it costs from CHF 1,500. For founders abroad, see also Setting up a company in Switzerland as a foreigner and GmbH or AG?
Frequently asked questions
When does a GmbH pay off compared with a sole proprietorship?+
It depends on profit, canton, risk and plans. For tax purposes, a threshold of around CHF 80,000 to 150,000 net profit is often quoted – below that, the extra costs of a GmbH (double-entry bookkeeping, annual accounts) often eat up the tax advantage. A GmbH can pay off earlier for other reasons: liability risks, partners or employees, credibility with business clients, or a planned sale. Your tax adviser can do the exact calculation.
Am I personally liable with a sole proprietorship?+
Yes. A sole proprietorship (Einzelunternehmen) does not separate business and private assets: you are personally and fully liable for all business debts. With a GmbH, as a rule only the company's assets are liable.
Does a sole proprietorship have to be registered in the commercial register?+
From an annual turnover of CHF 100,000, yes. Below that, registration is voluntary but protects the business name. A GmbH only comes into existence with its entry in the commercial register.
Can foreigners run a sole proprietorship in Switzerland?+
A sole proprietorship is tied to its owner, who carries on the business personally; in practice this usually requires residence in Switzerland and a corresponding permit. Founders living abroad generally choose a GmbH or AG, which only needs one representative resident in Switzerland.
Can I switch from a sole proprietorship to a GmbH later?+
Yes, at any time. The business is transferred to a new GmbH or AG by an asset transfer under the Mergers Act or by a contribution in kind – usually tax-neutral if the business continues and the new shares are not sold for five years. With us from CHF 1,500.
Ready to set up your Swiss company?
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Flat fees excl. VAT; official commercial register fees are charged separately by the registry.
More English guides
How to Set Up a Company in Switzerland as a Foreigner
No Swiss passport required: who can found a Swiss GmbH or AG, how to meet the Swiss residency requirement for one authorised signatory, how to sign from abroad without an apostille and what it costs.
English guideGmbH or AG? Choosing the Right Swiss Company Type
Share capital, liability, privacy of owners, transfer of shares, management and audit: the key differences between the Swiss GmbH (LLC) and the AG (company limited by shares) – and which one fits your plans.